OREANDA-NEWS. Real estate stocks and houses have synergies while representing two very different asset classes. Stocks are traded with much more frequency than houses, with prices generally gauged on a day-to-day basis. Property prices are gauged over long time frames, with the benchmark Urban Redevelopment Authority Property Price Index by Residential Type published on a quarterly basis. Thus stock prices can swing more than house prices, and are more suited to investors who can take on more market risk than is typically involved in housing prices.  

In the first half of 2015, the four Real Estate Management & Development stocks of the Straits Times Index (STI) – Hongkong Land Holdings, Global Logistic Properties, CapitaLand and City Developments averaged an 8.1% total return. In the first eight weeks of the second half of 2015, the four stocks have averaged a 15.9% decline.

By contrast the two Real Estate Investment Trusts (REITs) that are a part of the STI averaged a 7.3% gain in the first half of 2015, and a 10.8% decline in the first eight weeks of the second half of 2015. Meanwhile, the Urban Redevelopment Authority Property Price Index by Residential Type generated a marginal decline of 1.9% in the first six months of 2015, with data for the September quarter expected to be released in the first week of October.

Elasticity of the big Real Estate Management & Development stocks to regional growth and interest rates means poised the sector as one of the most cyclical in past few years, while averaging longer term returns that saw investors doubling their investment over the past ten years.

Real Estate Management and Development Sector

The MSCI World Real Estate Management and Development Index comprises of global companies engaged in real estate development and sales, real estate operations and management, or in real estate services. The index has a combined market capitalisation of US$431.8 billion. In the 2015 year thus far, the index has experienced a 7.2% decline in total return and maintains a price-to-earnings (P/E) ratio of 11.3 with a dividend yield of 2.0%.

The 10 largest capitalised active Real Estate Management and Development stocks listed on Singapore Exchange (SGX) have a combined market capitalisation of S$70.7 billion representing approximately 8% of the total market capitalisation of all stocks listed on SGX. Including the aforementioned four STI stocks, the 10 real estate development stocks averaged a -6.5% YTD total return, and trade at a average P/E ratio of 10.0 and dividend yield of 2.5%.

Average P/E

Average P/B

Average Dividend Yield

2015 YTD Total Return

Among the group of ten stocks categorised to the Real Estate Management and Development sector by the Global Industry Classification Standard (GICS®), the five best performers in the year-to-date were: GuocoLand, Hongkong Land Holdings, Yanlord Land Group Limited, Frasers Centrepoint and United Industrial Corporation.

On average the 10 stocks were trading at 2.3% above their 12 month lows as of the close yesterday. Seven of the 10 stocks formed 12 month lows within the past five sessions.  Of the seven stocks, Sinarmas Land formed a low last week on 19 August, and closed yesterday 10.7% above that S$0.42 low.

The remaining six stocks formed lows either 24 August or 25 August. Hongkong Land Holdings, GuocoLand and Yanlord Land Group formed their 52 week lows in October 2014, December 2014 and March 2015 respectively.

The table below details the 10 Real Estate Management and Development stocks, note that by clicking on a name it will take you directly to its page on SGX StockFacts.